Mr Akan Gürkan answers questions about property purchase problems

Following his very informative  presentation, Mr. Gürkan went on to take questions from the audience.  I am sure, many of you, after reading yesterday’s article, would like to ask the same questions.  I do hope they are here for you to see the answers.
I am aware that much of what was covered here is similar in content to the address given by Mr. Kursat in March 2006, I hope that the question and answer session here covers much of what you would have liked to ask Mr. Kursat.
We are all still left asking one unanswered question, why was it allowed to go so wrong?

Open Questions

Q.    What happens if a builder cannot pay his taxes due on transfer of deeds?

This is a collection matter, but if the taxes are not paid, the deeds will not be transferred, no matter how willing the builder is to put them in your name. So what can you do – you could keep a retention payment equal to, or more than, the projected taxes to be collected and use this money to pay the builders taxes.

Failing that you could pay his taxes for him.

Q – Why can’t the tax be deducted from each stage payment to avoid this situation?

This is something that is being looked at with the Estate Agents Bill as monies collected will be regulated and lodged with a state bank, this is a possibility.

Q – Why are these cases not looked on as theft or fraud?

To prove fraud or theft – you would have to prove that the seller intended to commit fraud or theft – the contract is evidence of his intent to pass the deeds to you, regardless of what happens in the future. Some sellers have been caught out as properties are being valued higher than anticipated and the % of tax to be paid has risen also.

Q – Would you advise anyone to buy here?

Yes – you can place a monetary charge (as opposed to a promise from the seller not to use the asset as a clause in your contract – as you cannot enforce that) similar to a mortgage on the property for the full value. This will be lodged at the Land Registry as a interest in the property to £X value – this means the seller cannot sell, mortgage or transfer the property to anyone else as you have first call on it. Your permission would be required for any legal dealings to do with that land.

Q – Two Greek couples (European) bought properties near to me recently – their PTBuy have come through before mine why?

Don’t know – there is no rhyme or reason to how PTBuy are processed.

Q – Is the contract worth the paper it is written on?

Yes, but both parties need to adhere to it. If the law changes to include specific performance, the honesty of both parties would no longer be relevant.

Q – As a lawyer do you advise clients how long the buying process may take?

I advise my clients 2 -3 years. However, this could be speeded up with the changes that are being discussed.

Q – What can individuals do about poor quality workmanship, or non completion of builds?

This is a particularly frustrating situation that many of you face. If after repeated requests a builder does not complete outstanding works, I tell my clients to get the work finished, obtain a receipt and deduct this sum from your final payment. If full monies have been paid, you will have to sue for breach of contract and get your money back – but you cannot sue until you have your title deed as the seller could evict you, renege on selling you the house, or refuse to sign over the deeds.

Q – If your build is complete but main services are not connected  – can a property be considered completed from the point of view of penalty clauses?

If Permission to Build has been granted, provision of main services is guaranteed by a by-law. This is an area outside the control of the builder as although he pays for the work, he does not schedule it. Doubtful

Q – Is there a formula to help calculate the taxes that are to be paid on transfer of deeds?

Yes – there is a contract tax of 1.5% (e.g. 100k valuation = 1.5K)

There is VAT of 5% to be paid on the valuation of the property. ( e.g. 100k valuation = 5K)

Property tax is set at 6.25% of valuation (e.g. 100k valuation = 6.25K)

Total = £12750

Q – What can you do, if after waiting 3 years for your Permission to Buy your seller refuses to transfer the deeds to you?

You will have to go to court to ask for damages/consideration. This is usually the monies you have paid, plus any additional value added to the property, plus an element of lost interest. He/She cannot be forced to hand the deeds to you due to the lack of specific performance being inherent as a remedy for breach.

Q – If your property valuation appears high compared to others in your area – can you appeal?

This is a grey area. Should valuation be calculated on building costs, contracted price or market value? At best it is an educated guess – you can try if you feel it is unfair.

Q – If you are suing a seller can you place a charge on any of his/her property?

You can place an injunction on the sellers property if you are taking a civil action against a seller.

There were no further questions from the floor, so Mr Gürkan closed his presentation and the meeting recessed.

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